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This article was written by Dr Nicola Bowes

Dr Nicola Bowes holds a Bachelor of Arts with first class honours from the University of Tasmania, a Bachelor of Laws with first class honours from the Queensland University of Technology, and a PhD from The University of Queensland. After a decade working in higher education, Nicola joined Armstrong Legal in 2020.

Testamentary Forgiveness Of Debt (Qld)


A testator can draft his or her will to include many different types of provisions, including a clause that forgives outstanding debt. This is a common practice when, for instance, parents have lent their children money or given them an early inheritance. The debtor will no longer be required to pay the debt or the interest on the loan. This article outlines the implications of testamentary forgiveness of debt with reference to recent Queensland case law.

A testator can make a final gesture of kindness in their will and forgive the debt of a friend or family member. In theory, if a will does not explicitly forgive a debt, the executor is obliged to recover the debt and redistribute the funds to the beneficiaries of the estate. The testator should be aware that forgiving debt reduces the value of the deceased estate for distribution to their loved ones. Elsewhere in Australia, if a testator forgives a debt in their will, it may be subject to a notional estate order (for instance, this would apply under the Succession Act 2006 in NSW). However, this provision does not apply in Queensland.

Types Of Testamentary Forgiveness Of Debt

A testator can forgive a variety of debt in his or her will, including contractual obligations, unpaid loans and damages arising from civil litigation. A testator can forgive part or the entire debt. The testator should state in their will the original amount of the loan in total, even if payments have been made to reduce the debt. If the testator only wants to forgive part of the debt, they must state the exact amount that they intend to forgive in the will.

Problems With Testamentary Forgiveness Of Debt

A testator may not be able to forgive a debt if the estate is insolvent. If the executor cannot pay the debts of the estate, he or she will take steps to recoup forgiven debt and sell assets originally intended for beneficiaries.

Someone who does not receive sufficient provision from a deceased estate may also contest the forgiveness of a debt. For instance, if a father has two children, and in his will forgives a debt for his daughter and otherwise leaves no provision for his son, the son can contest the will, and if there are insufficient assets in the estate, the court can order the daughter to repay the debt. Whether the court would support such an application depends on a variety of factors, particularly the relative financial positions of each child.

Case Study

The Queensland Supreme Court recently examined the issue of testamentary forgiveness of debt in Collins v Marinovich & Ors [2021]. In this case, the court was asked to consider whether a testator could revoke forgiveness of a debt. The testator, in this case, had lent her niece a million dollars to buy a property on the understanding that the debt would be forgiven in her will. The mortgage between the testator and her niece stated that the debt would last for the testator’s “natural life” but would convert upon her death to “an inheritance”. While the terms of the mortgage made no mention of interest payments, the installment payments did not reduce the debt, and the court deduced that the testator wished to avoid paying income tax on the interest payments.

The relationship between the testator and her niece subsequently broke down and she asked her niece to repay the loan in full immediately. The testator proceeded to claim that payments were in arrears and that she would be proceeding with a sale of the property. The testator also attempted to have her niece sign an Amendment to Mortgage to remove the forgiveness of debt clause, but her niece never signed the document. The testator died with the matter unresolved, except that in her new will she left her interest in the mortgage to a friend.

The niece filed an application with the Supreme Court seeking an order confirming that the debt had been forgiven upon the testator’s death. The niece’s argument was that the testator could not unilaterally vary the terms of the mortgage through her will. The executor of the estate claimed that the clauses in the mortgage pertaining to forgiveness of the debt were testamentary dispositions that were severable from the mortgage. The court held that a will could not alter an agreement in a separate contract and the mortgage debt was forgiven on the event of the testator’s death.

The solicitors at Armstrong Legal can advise you on whether you can forgive a debt in your will. If you want to contest a forgiven debt, our contested wills team can advise you or represent you in a court proceeding. Please do not hesitate to contact or call our experienced wills and estates solicitors for any legal assistance.

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